Abstract
AbstractThis paper examines the impact of governmental unity on corporate performance. Calendar years are classified as united when the president, Senate majority, and House majority are all from the same political party. Results indicate that firms have higher accounting return on assets when the federal government is united than when it is not. Firms have higher accounting return on assets when federal and state governments are both united under the same party, though the structures of federal and state governments may differ in the same time episode. The positive effect of government unity on corporate performance is stronger when the firm's sales growth rate is greater and profitability more volatile. The results are consistent with united government promoting legislation efficiency and reducing uncertainty in political environments.
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